<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
JAVA CENTRALE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
(NOT APPLICABLE)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously paid:
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(2) Form, Schedule, or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPIES
JAVA CENTRALE, INC.
1610 ARDEN WAY, SUITE 145
SACRAMENTO, CALIFORNIA 95815
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 17, 1996
TO THE SHAREHOLDERS OF JAVA CENTRALE, INC.:
The 1996 Annual Meeting of Shareholders of Java Centrale, Inc. (the
"Company") will be held at the Hilton Hotel, 2200 Harvard Street, Sacramento,
California, at 8:00 A.M. on October 17, 1996, for the following purposes:
1. ELECTION OF DIRECTORS. To elect a Board of four Directors, to serve for
the ensuing year.
2. AMENDMENT OF THE ARTICLES OF INCORPORATION. To amend Articles III and IV
of the Company's Articles of Incorporation in order to provide for a new
class of 25,000,000 shares of Preferred Stock and authorize the Board of
Directors to issue such shares at its discretion.
3. APPROVAL OF INDEPENDENT AUDITORS. To ratify the appointment of Grant
Thornton, LLP as independent certified accountants to audit the Company's
financial statements for the fiscal year ending March 31, 1997.
4. OTHER BUSINESS. To consider and act upon such other business as may
properly come before the meeting or any adjournment thereof.
Only holders of Common Stock of record as of the close of business on
September 6, 1996 will be entitled to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
Steven J. Orlando, CORPORATE SECRETARY
September 21, 1996
YOU ARE URGED TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSALS BY SIGNING AND
RETURNING THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. THE ENCLOSED PROXY IS SOLICITED BY THE COMPANY'S
BOARD OF DIRECTORS. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT PRIOR TO THE
TIME IT IS VOTED BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING OF SUCH
REVOCATION, BY FILING A DULY-EXECUTED PROXY BEARING A LATER DATE, OR BY
ATTENDING THE ANNUAL MEETING IN PERSON AND VOTING BY BALLOT.
<PAGE>
JAVA CENTRALE, INC.
1610 ARDEN WAY, SUITE 145
SACRAMENTO, CALIFORNIA 95815
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 17, 1996
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for use at the 1996 Annual Meeting of Shareholders (the "Annual
Meeting") of Java Centrale, Inc. (the "Company") to be held on Thursday, October
17, 1996 at 8:00 A.M., at the Hilton Hotel, 2200 Harvard Street, Sacramento,
California, and at any and all adjournments thereof.
It is anticipated that this Proxy Statement and the accompanying Notice and
form of Proxy will be mailed to shareholders eligible to receive notice of and
vote at the Annual Meeting on or about September 21, 1996.
REVOCABILITY OF PROXIES
A form of proxy for voting your shares at the Annual Meeting is enclosed.
Any shareholder who executes and delivers such proxy has the right to, and may,
revoke it at any time before it is exercised, by filing with the Secretary of
the Company an instrument revoking it or a duly executed Proxy bearing a later
date. In addition, if the person executing a proxy is present at the Annual
Meeting, and elects to vote in person, the powers of the proxy holders will be
superseded as to those Proposals on which the shareholder actually votes at the
Annual Meeting.
PERSONS MAKING THE SOLICITATION
THIS SOLICITATION OF PROXIES IS BEING MADE BY THE COMPANY'S BOARD OF
DIRECTORS. The expenses of preparing, assembling, printing, and mailing this
Proxy Statement and the materials used in the solicitation of proxies for the
Annual Meeting will be borne by the Company. It is contemplated that proxies
will be solicited principally through the use of the mails, but officers,
directors, and employees of the Company may solicit proxies personally or by
telephone, without receiving special compensation therefor. The Company will
reimburse banks, brokerage houses and other custodians, nominees, and
fiduciaries for their reasonable expenses in forwarding these proxy materials to
shareholders whose stock in the Company is held of record by such entities. In
addition, the Company may use the services of individuals or companies it does
not regularly employ in connection with this solicitation of proxies if
management determines it to be advisable.
VOTING SECURITIES
There were issued and outstanding 11,113,781 shares of the Company's common
stock (the "Common Stock") as of the close of business on September 6, 1996,
which date has been fixed as the record date for the purpose of determining
shareholders entitled to notice of, and to vote at, the Annual Meeting (the
"Record Date").
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of directors, shareholders may vote in
favor of all nominees, or withhold their votes as to all nominees, or withhold
their
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votes as to specific nominees, by following the instructions on the enclosed
proxy card. With respect to the proposed amendment of the Company's Articles of
Incorporation and the appointment of Grant Thornton, LLP to serve as the
Company's independent auditors for the 1997 fiscal year, shareholders may vote
in favor of or against the proposal, or may abstain from voting, by specifying
their choice as indicated on the enclosed proxy card. If no specific
instructions are given with respect to any matter to be voted on, the shares
represented by a signed proxy will be voted FOR the election of the Board's
nominees, FOR the proposed amendment of the Company's Articles of Incorporation,
and FOR the appointment of Grant Thornton, LLP as independent auditors.
Directors will be elected by a plurality of the votes cast by the holders of
the Company's Common Stock, voting in person or by proxy at the Annual Meeting;
ratification of the appointment of Grant Thornton, LLP as independent auditors
will require the affirmative vote of the holders of a majority of the shares of
Common Stock of the Company voting on such appointment in person or by proxy at
the Annual Meeting. Thus abstentions, although they will be counted in
determining whether a quorum is present for the vote on both matters, will have
no direct effect on the outcome of either of those votes. Similarly, broker
non-votes are also counted towards a quorum but are not counted for any purpose
in determining whether a matter has been approved, and will have no direct
effect on the outcome of the votes for election of directors or the appointment
of Grant Thornton, LLP. The proposed amendment of the Company's Articles of
Incorporation, however, will require the affirmative vote of a majority of the
outstanding shares entitled to vote, whether or not such shares are actually
represented in person or by proxy at the Annual Meeting. Consequently,
abstentions and broker non-votes will have the same effect as a vote against the
proposed amendment.
On any matter submitted to the vote of the shareholders other than the
election of directors, each holder of Common Stock will be entitled to one vote,
in person or by proxy, for each share of Common Stock held of record on the
Company's books as of the Record Date. In connection with the election of
directors, shares may be voted cumulatively, but only for persons whose names
have been placed in nomination prior to the voting for election of directors and
only if a shareholder present at the Annual Meeting gives notice at the Annual
Meeting, prior to such voting, of his or her intention to vote cumulatively.
(Notice of intention to vote cumulatively may not be given by simply marking and
returning a proxy.) If any Company shareholder gives such notice, then all
shareholders eligible to vote will be entitled to cumulate their votes in voting
for election of directors. Cumulative voting allows a shareholder to cast a
number of votes equal to the number of shares held in his or her name as of the
Record Date, multiplied by the number of directors to be elected. All of these
votes may be cast for any one nominee, or they may be distributed among as many
nominees as the shareholder sees fit. The nominees receiving the highest number
of votes, up to the number of directors to be elected, shall be elected.
If one of the Company's shareholders gives notice of intention to vote
cumulatively, the persons holding the proxies solicited by the Board of
Directors will exercise their cumulative voting rights, at their discretion, to
vote the shares they hold in such a way as to ensure the election of as many of
the Board's nominees as they deem possible. This discretion and authority of the
proxyholders may be withheld by checking the box on the proxy card marked
"withhold from all nominees." Such an instruction, however, will also deny the
proxyholders the authority to vote for any or all of the nominees of the Board
of Directors, even if cumulative voting is not called for at the Annual Meeting,
although it will not prevent the proxyholders from voting, at their discretion,
for any other person whose name may be properly placed in nomination at the
Annual Meeting.
A shareholder may choose to withhold from the proxyholders the authority to
vote for any of the individual candidates nominated by the Board of Directors,
by marking the appropriate box on the proxy card and striking out the names of
the disfavored candidates as they appear on the proxy card. In that event the
proxyholders will not cast any of the shareholder's votes for candidates whose
names have been crossed out, whether or not cumulative voting is called for at
the Annual Meeting, but they will retain the authority to vote for the
candidates nominated by the Board of Directors whose names have not been
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struck out, and for any other candidates who may be properly nominated at the
Annual Meeting. If a shareholder wishes to specify the manner in which his or
her votes are allocated in the event of cumulative voting, he or she must appear
and vote in person at the Annual Meeting. Ballots will be available at the
Annual Meeting for persons desiring to vote in person.
All votes will be tabulated by Grant Thornton LLP, the Company's tabulating
agent. Representatives of Grant Thornton LLP will be in attendance at the Annual
Meeting in order to receive any votes cast at that time.
SHAREHOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 6, 1996, the number and
percentage of shares of the Company's outstanding Common Stock beneficially
owned, directly or indirectly, by (a) any person (or "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934 who or which is
known to the Company to be the beneficial owner of more than five percent (5%)
of the Company's Common Stock, based on information filed by such persons with
the Securities and Exchange Commission, (b) each of the Company's directors and
the executive officers identified in the chart below, and the Company's
directors and executive officers as a group. The Company has no other
outstanding class of stock. The shares listed as "beneficially owned" are
determined under Securities and Exchange Commission Rules, and do not
necessarily indicate ownership for any other purpose. In general, beneficial
ownership includes shares over which the individuals listed below have sole or
shared voting or investment power and shares which such persons have the right
to acquire within 60 days of September 6, 1996. Unless otherwise indicated, the
persons listed have sole voting and investment powers of the shares beneficially
owned. Management is not aware of any arrangements which may, at a subsequent
date, result in a change of control of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) CLASS
- ----------------------------------------------------------------- ---------------- -------------
<S> <C> <C>
Baycor Ventures, Inc. ........................................... 1,811,266(2) 16.3%
1550, 3800 Howard Hughes Avenue,
Las Vegas, NV 89109
Kevin R. Baker .................................................. 1,811,266(3) 16.3%
2000, 335-8th Avenue, S.W.
Calgary, Alberta
Canada T2P 1C9
Thomas A Craig .................................................. 220,027(4) 2.0%
1610 Arden Way, Suite 145
Sacramento, CA 95819
Bradley B Landin ................................................ 154,000(5) 1.4%
1610 Arden Way, Suite 145
Sacramento, CA 95819
Gary C. Nelson .................................................. 1,218,000(6) 10.6%
1610 Arden Way, Suite 145
Sacramento, CA 95819
Steven J. Orlando ............................................... 427,200(7) 3.7%
1610 Arden Way, Suite 145
Sacramento, CA 95819
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) CLASS
- ----------------------------------------------------------------- ---------------- -------------
Richard D. Shannon .............................................. 2,228,016(8) 19.3%
2000, 335-8th Avenue, S.W.
Calgary, Alberta,
Canada T2P 1C9
<S> <C> <C>
All Directors and Officers as a Group (six persons).............. 4,247,243(9) 34.3%
</TABLE>
- ------------------------
(1) All shares are owned directly by the individual(s) indicated, unless
otherwise indicated.
(2) Does not include 125,000 shares held by Baycor Ventures, Inc. ("Baycor") but
subject to currently exercisable options in favor of Messrs. Nelson, Craig
and Landin.
(3) Includes shares owned by Baycor, a corporation of which Mr. Baker is an
officer, Director, and 50% stockholder. Does not include 125,000 shares held
by Baycor but subject to currently exercisable options in favor of Messrs.
Nelson, Craig and Landin.
(4) Includes 21,000 shares available to Mr. Craig upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company shares
presently owned by Baycor, and 13,000 shares issuable upon the exercise of
stock options exercisable within 60 days of September 6, 1996.
(5) Includes 15,000 shares available to Mr. Landin upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company shares
presently owned by Baycor, and 14,000 shares issuable upon exercise of stock
options exercisable within 60 days of September 6, 1996.
(6) Includes 89,000 shares available to Mr. Nelson upon the exercise of a
currently exercisable option issued by Baycor on outstanding Company shares
presently owned by Baycor, 20,000 shares issuable upon the exercise of stock
options exercisable within 60 days of September 6, 1996, and 400,000 shares
issuable upon the exercise of warrants exercisable within 60 days of
September 6, 1996.
(7) Includes 20,000 shares issuable upon the exercise of stock options
exercisable within 60 days of September 6, 1996 and 400,000 shares issuable
upon exercise of warrants exercisable within 60 days of September 6, 1996.
(8) Includes shares owned by Baycor, a corporation of which Mr. Shannon is an
officer, Director, and 50% stockholder. Does not include 125,000 shares held
by Baycor but subject to currently exercisable options in favor of Messrs.
Nelson, Craig and Landin. Includes 9,750 shares issuable upon exercise of
stock options exercisable within 60 days of September 6, 1996, and 400,000
shares issuable upon the exercise of warrants exercisable within 60 days of
September 6, 1996.
(9) Includes an aggregate of 1,276,750 shares issuable upon the exercise of
outstanding stock options and warrants which are exercisable within 60 days
of September 6, 1996.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
NOMINEES
The Company's directors are elected annually, to serve until the next Annual
Meeting of shareholders and until their respective successors have been elected.
All of the nominees listed below, except Mr. Edwards, have served as directors
since the Company's inception in March of 1992.
The Company's Bylaws provide that the number of directors of the Company may
not be less than four nor more than seven until changed by an amendment to the
Bylaws adopted by the Company's shareholders, with the exact number of directors
within that range to be set by vote of the Board. At present, the Company's
Bylaws provide for a Board consisting of four directors, and consequently
proxies may be voted for four directors.
The persons named below will be nominated for election as directors at the
Annual Meeting to serve until the 1997 Annual Meeting of Shareholders and until
their successors are duly elected. Unless otherwise instructed, proxyholders
will vote the proxies received by them for the election of the nominees below
(or as many thereof as possible under the rules of cumulative voting). In the
event that any of the nominees should be unable to serve as a director, it is
intended that the proxy will be voted for the election of such substitute
nominee, if any, as shall be designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees named below will be
unable to serve if elected. Additional nominations for director may only be made
by complying with the nomination procedures which are described under the
heading "Shareholder Proposals and Nominations" at the end of this Proxy
Statement.
The following table sets forth the names of, and certain information
concerning, the persons to be nominated by the Board of Directors for election
as directors of the Company. All of these individuals, except Mr. Edwards, have
served as directors of the Company since its inception in 1992.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH COMPANY
- ----------------------- --- ---------------------------------------------------------------
<S> <C> <C>
Richard D. Shannon 51 Director, Chairman of the Board
Gary C. Nelson 53 Director, President and Chief Executive Officer
Lyle P. Edwards 48 Nominee for Director
Kevin R. Baker 47 Director
</TABLE>
Richard D. Shannon became Chairman of the Board in January 1994. He
currently devotes approximately 75% of his time to his duties with the Company.
In February 1990, Mr. Shannon, together with Kevin R. Baker, also a Director of
the Company, founded Baycor Capital Inc. ("Baycor Capital"), a private merchant
bank based in Calgary, Canada. Baycor Capital owns 100% of the issued and
outstanding shares of Baycor Ventures, the largest single shareholder of the
Company. Mr. Shannon is also the President of Baycor Ventures. Mr. Shannon is a
director of a number of privately held companies in Canada.
Gary C. Nelson, a founding shareholder of the Company, has been President
and Chief Executive Officer of the Company since its incorporation in March
1992. From September 1990 through October 1991 Mr. Nelson was both Senior Vice
President and President, International Division, and a founding shareholder of
CNY International, a company which was formed to acquire and operate the retail
businesses of American Confectionery Corporation. From March 1990 until August
1990, Mr. Nelson was Senior Vice President of American Confectionery
Corporation, a company which both owned and franchised over two hundred candy
and yogurt outlets. From February 1983 until February 1990, Mr. Nelson was a
founding shareholder and served as President and Chief Executive Officer of
publicly traded J. Higby's, Inc. and its privately held predecessor, Gamma
Industries, whose business was franchising J. Higby's Yogurt and Treat Shoppes
in the United States and internationally in Canada and five countries in
southeast Asia.
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Lyle P. Edwards, is a businessman involved in the ownership and operation of
a number of real estate and other business ventures in Canada and the United
States. Mr. Edwards serves as a director of a number of privately held companies
in Canada and the United States and is also director of one publicly listed
company in Canada. Since 1987, Mr. Edwards has been the Chief Executive Officer
of Westwood Financial Services Ltd. During the period 1974 through 1987, Mr.
Edwards served as an officer, director and ultimately President of Highfield
Corp., Ltd., a major diversified investment corporation operating offices in
several of the major cities in Western North America. Mr. Edwards was admitted
to the Canadian Institute of Chartered Accountants and was associated with
Deloite Haskins and Sells, the predecessor firm of Deloitte & Touche, from 1970
to 1974. Mr. Edwards graduated from the University of Alberta, Canada where he
obtained a Bachelor of Science and Bachelor of Commerce.
Kevin R. Baker has been a Director of the Company since its incorporation in
March 1992. Since February 1990, Mr. Baker has been the President of Baycor
Capital, a private merchant bank based in Canada, which is the parent
corporation of Baycor Ventures, the majority shareholder of the Company. Baycor
Capital holds interests in a diversified portfolio of companies and assets in
Canada and the United States. During the period 1971 to January 1990, Mr. Baker
practiced law at MacKimmie Matthews and Burnet, Duckworth & Palmer, two law
firms in Calgary, Canada. Mr. Baker is a director of a number of companies,
including Cascade Oil & Gas Ltd., an oil and gas company based in Calgary which
is publicly traded in Canada.
The term of office of each director of the Company is one year. None of the
directors were selected pursuant to any arrangement or understanding other than
with the directors and officers of the Company acting within their capacities as
such. There are no family relationships between any of the directors and
executive officers of the Company. No director or officer of the Company serves
as a director of any company which has a class of securities registered under,
or which is subject to the periodic reporting requirements of, the Securities
Exchange Act of 1934, or of any company registered as an investment company
under the Investment Company Act of 1940.
Directors of the Company are elected at each annual meeting of the
shareholders of the Company and hold office until the next annual meeting;
provided, however, that if any annual meeting is not held or the directors are
not elected at any annual meeting, they may be elected at any special
shareholders' meeting held for that purpose. Each director, including a director
elected to fill a vacancy or elected at a special shareholders' meeting, holds
office until the expiration of the term for which elected and until a successor
has been elected and qualified. Directors of the Company do not currently
receive any compensation for serving as Directors.
VOTE REQUIRED FOR THE ELECTION OF DIRECTORS
The affirmative vote of a majority of the shares of Common Stock present and
voting at the Annual Meeting is required to elect each of the nominees for
director. Each share of Common Stock which is represented, in person or by
proxy, at the Annual Meeting will be accorded one vote on each nominee for
director, unless one or more shareholders express an intention to exercise the
right of cumulative voting, in which case all shares will be accorded the
cumulative voting rights described under the caption "Voting Securities," above.
The Board of Directors recommends a vote FOR each of the nominees for
director described above.
PROPOSAL NO. 2 -- AMENDMENT OF THE ARTICLES OF INCORPORATION TO
AUTHORIZE 25,000,000 SHARES OF UNDESIGNATED PREFERRED STOCK
Article III of the Company's Articles of Incorporation currently authorizes
the Company to issue up to 25,000,000 shares of Common Stock and 25,000,000
shares of Preferred Stock. Article IV requires that any such Preferred Stock
issuable in a single series, and imposes a number of restrictions on the
dividends, liquidation preferences, voting rights, redemption rights, and
conversion rights applicable to any Preferred
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Stock which may be issued by the Company. As of the date of this Proxy
Statement, there are outstanding 11,113,781 shares of Common Stock and no shares
of Preferred Stock.
On July 31, 1996, the Board of Directors unanimously adopted a resolution to
amend Article III of the Company's Articles of Incorporation to authorize the
Company to issue up to 25,000,000 shares of Preferred Stock, and to delete the
current Article IV in its entirety. As so amended, Article III would authorize
the Board to cause shares of Preferred Stock to be issued in one or more series
and with such preferences, limitations, and relative rights, at such times, and
for such consideration, as the Board may determine without shareholder approval.
The full text of the current and proposed new versions of Article III, and the
entire text of the current Article IV, are attached to this Proxy Statement as
Appendix A.
PURPOSES OF THE PROPOSED AMENDMENT
Current Articles III and IV of the Company's Articles of Incorporation were
adopted in May of 1994 as part of the process which led to the Company's initial
public offering. At that time, the Company's Articles of Incorporation were
amended and restated in order to, among other things, eliminate the Company's
then outstanding Series A Series A Preferred Stock, effect a two and one-half
for one split of the Company's Common Stock, and reclassify the Company's then
outstanding Series B Common Stock. Because of the conditions which existed when
those amendments were adopted, a number of features were incorporated into
Articles III and IV which are confusing and no longer necessary, and, in the
Board's opinion, may actually be harmful to the Company's ability to secure
future financing on a reasonable basis.
Many corporations, including many publicly traded corporations, have
provisions in their Articles of Incorporation which are similar to those which
have been proposed by the Board as described herein. The Company's Board of
Directors believes that the Company may in the future need to raise capital
through the issuance of Preferred Stock. If that need should arise, potential
investors may desire to purchase Preferred Stock under terms and conditions
which are incompatable with the provisions of the current Articles III and IV.
Accordingly, the Board believes that the proposed amendment, which would
authorize the Board to create and issue one or more series of Preferred Stock on
terms and containing conditions to be set by the Board at its discretion will
provide the Company with the greatest flexibility in negotiating, structuring
and securing additional investment.
In addition to allowing the Company to pursue financing alternatives that
would not exist if the Company did not have less restricted authority to issue
Preferred Stock, the Board could use the Preferred Stock for other purposes,
including public and private offerings of preferred shares for cash, payment of
stock dividends to the Company's shareholders, and the acquisition of the stock
or assets of another company. The Board has no present intention of taking any
of these actions, but the ability to do so could be of significant value to the
Company in the future.
Although the Board of Directors has no present intention to do so, the Board
of Directors could issue a series of shares of Preferred Stock that could,
depending on the terms of such series, discourage an acquisition or make it more
difficult for an acquirer to obtain control of the Company by means of merger,
tender offer, proxy contest or other means. For example, Preferred Stock could
be used to create voting or other rights which would be impediments to those
persons seeking to gain control of the Company. Such shares could be privately
placed with purchasers favorable to the Board of Directors opposing such action.
In addition, the Board of Directors could authorize holders of a series of
Preferred Stock to vote either separately as a class or with holders of the
Common Stock on any merger, sale, or exchange of assets by the Company or any
other extraordinary corporate transaction. Finally, the existence of the
additional authorized shares of Preferred Stock could have the effect of
discouraging unsolicited takeover attempts.
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TERMS OF PREFERRED STOCK
In designating the preferences, limitations, and relative rights of any
series of Preferred Stock, the Board of Directors will, if this Proposal is
approved by the shareholders, have the authority to provide that the shares of
any such series may:
(1) have special, confidential, or limited voting rights or no voting
rights;
(2) be redeemable or convertible: (a) at the option of the Company, by
the shareholder or another person on the occurrence of a designated event;
(b) for cash, indebtedness, securities, or other property; or (c) in a
designated amount or in an amount determined in accordance with a designated
formula or by reference to extrinsic data or events;
(3) entitle the holders to distributions calculated in any manner,
including dividends that may be cumulative, noncumulative, or partially
cumulative; and
(4) have a preference over any other classes or series of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the Company, all as the Board of Directors may deem advisable
and as are not inconsistent with the California General Corporation Law or
the Company's Articles of Incorporation.
For example, in the event that Company secures an institutional investment,
an institutional investor could require: (a) a liquidation preference ensuring
the return of the preferred investment ahead of any payments to the holders of
the Common Stock in the event of the liquidation, merger or sale of
substantially all of the assets of the Company and (b) the right to convert each
share of Preferred Stock into one or more shares of Common Stock based upon an
agreed conversion ratio. The exact terms of the Preferred Stock will be
negotiated with the investor and will vary depending on the particular needs and
concerns for that investor.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
ARTICLES OF INCORPORATION TO AUTHORIZE THE ISSUANCE OF UP TO 25,000,000 SHARES
OF PREFERRED STOCK SUBJECT TO SUCH RIGHTS PREFERENCES AND PRIVILEGES AS THE
BOARD OF DIRECTORS MAY DETERMINE.
PROPOSAL NO. 3 -- APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors has appointed Grant Thornton, LLP as the Company's
independent accountants to audit the consolidated financial statements of the
Company and its subsidiaries for the Company's fiscal year ending March 31,
1997.
Grant Thornton, LLP served as the Company's auditors for the fiscal year
ended March 31, 1996, and during the course of that fiscal year they were also
engaged by the Company to provide certain tax and consulting services. The
affirmative vote of a majority of the shares of Common Stock present and voting
at the Annual Meeting is required to approve the appointment.
The Board of Directors recommends a vote FOR Proposal No. 3, approval of the
appointment of Grant Thornton, LLP as the Company's independent auditors for
fiscal 1997. If the appointment is not approved, the Company's Board of
Directors will select other independent auditors. Representatives of Grant
Thornton, LLP will be present at the Annual Meeting to respond to appropriate
questions from the shareholders and will be given the opportunity to make a
statement should they desire to do so.
8
<PAGE>
OTHER INFORMATION
PERFORMANCE GRAPH
Set forth below is a performance graph comparing the yearly cumulative total
shareholder returns on the Company's Common Stock with the yearly cumulative
total shareholder return on (a) stocks included in the S&P 500 composite index
and (b) an index of peer group companies.
COMPARISON OF 10 MONTH CUMULATIVE TOTAL RETURN*
AMONG JAVA CENTRALE, INC., THE NASDAQ STOCK MARKET-US INDEX
AND THE S & P RESTAURANTS INDEX
* $100 INVESTED ON 05/10/94 IN STOCK OR ON 04/30/94 IN INDEX INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING MARCH 31.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six regular meetings in 1995 and
no regular meetings to date in 1996. All directors attended 75% or more of the
aggregate number of the Board of Directors and committee meetings on which each
director served.
The Board of Directors of the Company has only one committee, the Stock
Option Committee. The members of the Stock Option Committee are Richard D.
Shannon, the Company's Chairman of the Board, and Kevin R. Baker. The function
of the Stock Option Committee is to coordinate with the full Board the grant of
stock options to individual Company employees, officers, and directors. The
Stock Option Committee met six times during 1995 and twice in 1996.
9
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Board of Directors serves the functions of a Compensation
Committee for the Company's executive officers. Option awards are also
determined by the Board's Stock Option Committee.
The following is a report submitted by the Board of Directors, addressing
the compensation policies of the Company.
EXECUTIVE COMPENSATION POLICY. The goal of the Board is to ensure that an
appropriate relationship exists between executive compensation and the Company's
overall performance, while at the same time retaining key employees of the
Company and motivating them to perform at a superior level for the benefit of
the shareholders. To achieve this goal, the Company integrates annual base
compensation with bonuses based on the Company's performance and the performance
and initiative of its individual executive officers. The Company attempts to
establish base salaries that are generally within the range of salaries paid to
people holding comparably responsible positions at other peer group companies in
California, taking into account the individual's past performance and potential
future contributions. Bonus compensation is based primarily on the performance
of the Company. Measurement of Company performance is based primarily on that of
peer group companies and Company goals, including primarily its return on
equity. The compensation of executive officers of the Company's subsidiaries is
similarly based on the performance of such subsidiaries and their officers.
Except as limited by the Company's Stock Option Plan, stock options are granted
from time to time to employees, officers and directors of the Company on the
basis of the recipient's potential for contribution to the Company's future
growth and profitability.
The Board of Directors believes that linking executive compensation to
corporate performance results in a better alignment of compensation with the
Company's goals and shareholder interests. As performance goals are met or
exceeded, resulting in increased shareholder value, the Company's executives are
commensurately rewarded.
Kevin R. Baker, DIRECTOR
Gary C. Nelson
DIRECTOR AND PRESIDENT
Richard D. Shannon
CHAIRMAN OF THE BOARD
10
<PAGE>
The following table sets forth certain information regarding the executive
officers of the Company named below.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- -------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Richard D. Shannon 51 Director, Chairman of the Board
Gary C. Nelson 53 Director, President and Chief Executive Officer
Bradley B. Landin 45 Vice President Operations
Thomas A. Craig 63 Vice President -- Marketing and Real Estate
Steven J. Orlando 45 Vice President, Chief Financial Officer and Secretary
Kevin R. Baker 47 Director
</TABLE>
Thomas A Craig, a founding shareholder, has been Vice-President -- Marketing
and Real Estate of the Company since its incorporation in March 1992. Mr. Craig
has 29 years of experience in advertising, design, marketing and real estate.
From November 1987 until the incorporation of the Company in March 1992, he was
associated with Century 21, a real estate brokerage firm in Carmichael,
California specializing in the sale and leasing of new and existing commercial
properties. From May 1962 through July 1987 Mr. Craig served as president of two
advertising and marketing firms located in Sacramento, California. Mr. Craig is
a graduate of the Hollywood Center of Art and Design in Hollywood, California.
Bradley B. Landin, a founding shareholder, has been a Vice President
Operations of the Company since its incorporation in March 1992, and was a
Director of the Company until his resignation from the Board in July of 1996.
From September 1990 until February 1992, Mr. Landin was Vice President,
International Division, of CNY International. From March 1990 through August
1990, Mr. Landin was Vice President, International Development, of American
Confectionery Corporation, which both owned and franchised over two hundred
candy and yogurt outlets. From September 1986 until February 1990, Mr. Landin
held various positions with publicly traded J. Higby's Inc., where he was
responsible for franchised and company-owned operations, product development,
store planning and turn-key construction and equipment programs.
Steven J. Orlando has been the Company's Chief Financial Officer since July
of 1994. Since 1988, Mr. Orlando has acted as a business consultant to various
companies in the Sacramento and Los Angeles, California areas and served as the
President of RJN Enterprises, a private investment company. From 1977 to 1988,
Mr. Orlando was the Chief Financial Officer for Sierra Spring Water Company, a
publicly traded bottled water company based in Sacramento, California, with
operations in several regions around the country. Mr. Orlando received a B.S
degree in accounting from California State University, Sacramento, in 1974, and
has been a Certified Public Accountant since 1977. In addition to his
responsibilities with the Company, Mr. Orlando also serves as a director of and
consultant to various companies, including RJN Enterprises, a private investment
company based in Sacramento, California, and Pacific Crest Capital, a thrift and
loan company based in Los Angeles, California.
Officers of the Company are appointed by its Board of Directors, and serve
at the pleasure of the Board. The Company is not aware of any family
relationships among its Directors and/or executive officers.
The term of office of every officer of the Company is normally one year, but
every Company officer serves at the pleasure of the Board of Directors. There
are no understandings or arrangements between any of such officers and any other
person pursuant to which they were or are to be selected as officers of the
Company.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company to,
as well as any other compensation paid to or earned by, the Company's Chief
Executive Officer and the four most highly compensated executive officers other
than the Chief Executive Officer during each of the fiscal years ended March 31,
1994, 1995 and 1996. The Company's President and Chief Executive Officer, Mr.
Gary C. Nelson, was the only officer of the Company whose total annual salary
and bonus exceeded $100,000 during the 1994 and 1995 fiscal years. The Company's
President and Chief Executive Officer, Mr. Gary C. Nelson, the Company's Chief
Financial Officer, Mr. Steven J. Orlando, and the Company's Chairman, Mr.
Richard Shannon, were the officers of the Company whose total annual salary and
bonus exceeded $100,000 during the 1996 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------------------
---------------------------------------- SECURITIES
OTHER RESTRICTED UNDERLYING ALL
NAME OF INDIVIDUAL AND ANNUAL STOCK OPTIONS/ OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION AWARDS SARS(#) COMPENSATION
- --------------------------- ----------- ---------- --------- ----------------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gary C. Nelson 1996 $ 158,065 $ 35,000 $ 0 None 167,000 $ 0
President 1995 $ 147,538 0 0 None 0 0
(Chief Executive Officer) 1994 $ 111,250 0 0 None 87,500 0
Steven J. Orlando 1996 $ 97,050 $ 35,000 $ 0 None 175,000 $ 0
Chief Financial Officer
Richard Shannon 1996 $ 94,328 $ 35,000 $ 0 None 174,250 $ 0
Chairman of the Board
</TABLE>
COMPENSATION PURSUANT TO PLANS
THE JAVA CENTRALE, INC. 1993 STOCK OPTION PLAN
GENERAL INFORMATION ABOUT THE PLAN. The Board of Directors of the Company
adopted the Java Centrale, Inc. Stock Option Plan (the "Option Plan") in 1993,
and it was subsequently amended by the Company's Board of Directors and
shareholders in September of 1995. Under the terms of the Option Plan as it
currently exists, options to purchase up to 1,250,000 Common Shares may be
granted to officers, key employees and non-employee directors of the Company.
Such options, once granted, are not generally transferrable.
The purpose of the Option Plan is to provide incentives to key employees and
directors of the Company to continue and increase their efforts to improve
operating results, to remain in the employ or service of the Company, and to
have a greater financial interest in the Company through ownership of its Common
Stock.
Under the Option Plan, the Board, or a committee appointed by the Board, is
authorized to grant options which are intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code (the "Code") to employees
(including employee-directors) of the Company, and to grant options not intended
to qualify as incentive stock options ("nonstatutory stock options") to
employees and non-employee directors of the Company, and to determine the
participants, the number of options to be granted and other terms and provisions
of each option. The Board has appointed Richard D. Shannon and Kevin R. Baker to
serve as its Stock Option Committee, and delegated to the Committee all of its
administrative functions under the Option Plan.
12
<PAGE>
TERMS AND EXERCISE OF OPTIONS. The exercise price of any stock option
granted under the Stock Option Plan may not be less than 100% of the fair market
value of the Common Shares of the Company at the time of the grant. In the case
of incentive stock options granted to holders of more than ten percent of the
voting power of the Company, the exercise price may not be less than 110% of the
fair market value of the Common Stock, nor may any such option be exercisable by
its terms more than five years after the date the option is granted. The closing
sale price of the Company's Common Stock, as reported on the National
Association of Securities Dealers Automated Quotation System, Small Cap List as
of August 15, 1996, was $0.88 per share.
Under the terms of the Option Plan, no incentive stock option may be granted
to an optionee if the fair market value at the date of grant of shares with
respect to which such options would first become exercisable in any calendar
year, when added to the fair market value at the date of grant of any other
shares with respect to which an incentive option granted to such optionee under
the Option Plan (or any other incentive stock option plan maintained by the
Company or any of its subsidiaries) first becomes exercisable in such calendar
year, would exceed $100,000. Options granted under the Option Plan become
exercisable in whole or in part from time to time as determined by the Board of
the committee; provided, however, that in no event may any option become
exercisable earlier than the date six months following the date on which the
option is granted. Options granted under the Option Plan may have a maximum term
of ten years from the date of grant. The option price must be paid in full on
the date of exercise, and is payable in cash or in Common Shares of the Company
having a fair market value on the date the option is exercised equal to the
option price.
OUTSTANDING OPTIONS UNDER THE OPTION PLAN. As of August 15, 1996, the
Company had granted options to purchase 1,100,000 Common Stock, at exercise
prices of between $1.75 and $2.00 per share, to employees of the Company in
accordance with the Option Plan. A total of 1,100,000 options were granted under
the Option Plan during fiscal 1995. No options issued under the Option Plan have
yet been exercised.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the federal
income tax consequences associated with the granting and exercise of options
under the Plan, and the sale of the underlying shares. This summary is based on
existing federal income tax laws and regulations, and does not discuss the
provisions of the income tax laws of any State or foreign country. This summary
is applicable only as of the date of this Proxy Statement, and readers should be
aware that federal tax laws and regulations are subject to change at any time.
It is not intended to be, or offered as, a complete description of the tax
consequences which may be associated with any individual grant or exercise of an
option, or as tax, investment, or legal advice.
Options which do not qualify as incentive stock options are considered to be
"nonstatutory," and will not qualify for the special tax treatment available to
incentive stock options, as discussed below. Optionees who receive nonstatutory
stock options will not recognize any taxable income at the time the options are
granted or when they become vested; however they will normally recognize
ordinary income for federal tax purposes at the time an option is exercised. The
amount of the income recognized will be measured by the excess, if any, of the
fair market value of the Common Stock as of the exercise date over the exercise
price.
The Code provides favorable federal income tax treatment for options which
qualify as incentive stock options. As is the case with nonstatutory stock
options, the optionee will not recognize any income at the time an incentive
stock option is granted, but in addition the optionee will generally not
recognize income for federal tax purposes when the options are exercised, either
- -- it is only when the underlying shares are sold that the optionee will
normally recognize such income. If a sale of the Common Stock obtained through
the exercise of an incentive stock option takes place at least two years after
the option was granted, and one year after the incentive stock option was
exercised, the difference between the exercise price and the sales price will
normally be treated as long-term capital gain (or loss) for federal income tax
purposes in the tax year in which the sale of the shares takes place. If,
however, Common Stock acquired
13
<PAGE>
upon exercise of an incentive stock option are sold or otherwise disposed of
less than two years after the option was granted, or one year after it was
exercised, then the sale or other disposition will be treated as a
"disqualifying disposition" for federal tax purposes, and the optionee will
generally recognize ordinary income in the tax year in which such disposition
occurs.
The Federal income tax consequences of payment of the exercise price of an
option with shares of outstanding Company stock ("Payment Shares") are identical
to those described above for payment by means of cash, except as follows. The
holding period for that number of newly issued option shares which is equal to
the number of Payment Shares being used to purchase them (the "Exchange Shares")
is the same as the holding period of the Payment Shares. In the case of an
incentive stock option, the tax basis of the Exchange shares is the tax basis of
the Exchange Shares, while the tax basis of any additional option shares being
issued in exchange for the Exchange Shares is zero. In the case of a
nonstatutory stock option, the tax basis of the Exchange Shares is the tax basis
of the Payment Shares, while the tax basis of any additional option shares being
issued is their fair market value as of the date of exercise.
TAX BENEFITS TO THE COMPANY. The Company will be entitled to a deduction
for federal tax purposes in the amount and at the time that any optionee
recognizes ordinary income with respect to the exercise of an nonstatutory stock
option, or with respect to a disqualifying disposition of shares acquired upon
exercise of an incentive stock option. The Company will not be allowed a tax
deduction in connection with exercises of incentive stock options in which there
has not been a disqualifying disposition.
OUTSTANDING OPTIONS HELD BY CERTAIN EXECUTIVE OFFICERS. The following table
sets forth information concerning the aggregate value of all unexercised options
held by each of the named executive officers of the Company as of March 31,
1996, the end of its last fiscal year. The Company has never granted stock
appreciation rights to its directors or executive officers. No options were
granted to or exercised by any director or executive officer of the Company
during the fiscal year ended March 31, 1996, or between that date and the date
of this Proxy Statement.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND MARCH 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE- MONEY OPTIONS AT
SHARES OPTIONS AT MARCH 31, 1995 SEPTEMBER 6, 1996(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME AND POSITION ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- --------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary C. Nelson 0 $ 0 20,000 30,000 $ 8,800 $ 13,200
President and Chief
Executive Officer
Steven J. Orlando 0 $ 0 20,000 30,000 $ 8,800 $ 13,200
Vice President and
Chief Financial Officer
Richard D. Shannon 0 $ 0 9,750 40,250 $ 4,290 $ 17,710
Chairman of the Board
</TABLE>
- ------------------------
(1) All options were issued at the then-current market price on the grant date.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Richard D. Shannon,
the Company's Chairman of the Board; Gary C. Nelson, President and Chief
Executive Officer; Bradley B. Landin, Senior Vice President -- Operations;
Thomas A. Craig, Vice President -- Marketing and Real Estate; and Steven J.
Orlando, its Chief Financial Officer and Corporate Secretary.
Mr. Shannon's employment agreement was originally entered into in February
of 1994, but was amended in January and again in May of 1996. As so amended, Mr.
Shannon's agreement runs through
14
<PAGE>
January 31, 1999. Pursuant to his employment agreement, Mr. Shannon will act as
Chairman of the Company, will serve on the Board of Directors and will be
entitled to receive, among other things, (a) a base annual salary of $96,172
(subject to a potential increase to $137,388 upon the earlier to occur of (i)
one quarter of Company profitability or (ii) significant improvement in the
working capital condition of the Company, as approved by the Compensation
Committee, (b) beginning in February of 1997, an annual increase in base salary
in an amount equal to the amount of the then current salary plus the greater of
(i) 7% of the base salary in effect for the previous 12 month period and (ii)
the percentage increase in the Consumer Price Index for the prior 12-month
period as reported by the United States Department of Labor (the "Department of
Labor"), (c) an annual bonus, in an amount to be determined by the Board of
Directors, under such incentive compensation plan as shall be adopted by the
Board of Directors of the Company, and (d) such options to purchase Common Stock
of the Company as may be granted pursuant to the terms of the Stock Option Plan.
The employment agreement between the Company and Mr. Shannon does not require
him to spend more than 80% of his time on Company business.
Mr. Nelson's employment agreement was originally entered into in February of
1994, but was amended in January and again in May of 1996. As so amended, Mr.
Nelson's employment agreement runs through January 31, 1999. Pursuant to his
employment agreement, Mr. Nelson will act as President and Chief Executive
Officer of the Company, will serve on the Board of Directors, and will be
entitled to receive, among other things, (a) a base salary of $116,207 (subject
to a potential increase to $166,010 upon the earlier to occur of (i) one quarter
of Company profitability or (ii) significant improvement in the working capital
condition of the Company, as approved by the Compensation Committee if certain
Company performance standards are met), (b) beginning in February of 1997, a
base salary in an amount equal to the amount of the then current base salary
plus the greater of (i) 7% of the base salary in effect for the previous 12
month period and (ii) the percentage increase in the Consumer Price Index for
the prior 12-month period as reported by the Department of Labor, (c) an annual
bonus in an amount to be determined by the Board of Directors of the Company
under such incentive compensation plan as shall be adopted by the Board of
Directors of the Company, and (d) such options to purchase Common shares of the
Company as may be granted pursuant to the terms of the Stock Option Plan.
Mr. Landin's employment agreement was originally entered into in February of
1994, but was amended in January and May of 1996. As so amended, Mr. Landin's
employment agreement runs through January 31, 1999. Pursuant to his employment
agreement, Mr. Landin will act as Senior Vice President Operations of the
Company and will be entitled to receive among other things, (a) a base salary of
$73,274 (subject to a potential increase to $91,592 upon the earlier to occur of
(i) one quarter of Company profitability or (ii) significant improvement in the
working capital condition of the Company, as approved by the Compensation
Committee), (b) beginning in February 1997, a base salary in an amount equal to
the amount of the then current base salary plus the greater of (i) 7% of the
base salary in effect for the previous 12 month period and (ii) the percentage
increase in the Consumer Price Index for the prior 12-month period as reported
by the Department of Labor, (c) during each year thereof, an annual bonus in an
amount to be determined by the Board of Directors of the Company under such
incentive compensation plan as shall be adopted by the Board of Directors of the
Company, and (d) such options to purchase Common Shares of the Company as may be
granted pursuant to the terms of the Stock Option Plan.
Mr. Craig's employment agreement was originally entered into in February of
1994, but was amended in May of 1996. As so amended, Mr. Craig's employment
agreement runs through February 1997. Pursuant to his employment agreement, Mr.
Craig will act as Vice President -- Marketing and Real Estate of the Company,
and will be entitled to receive, among other things, (a) during the first year
thereof, a base salary of $73,274 (subject to a potential increase to $91,592
upon the earlier to occur of (i) one quarter of Company profitability or (ii)
significant improvement in the working capital condition of the Company, as
approved by the Compensation Committee), (b) beginning in February 1997, a base
salary in an amount equal to the amount of the then current base salary plus the
greater of (i) 7% of the base salary in effect for the previous 12 month period
and (ii) the percentage increase in the Consumer Price Index for the
15
<PAGE>
prior 12-month period as reported by the Department of Labor, (c) an annual
bonus in an amount to be determined by the Board of Directors of the Company
under such incentive compensation plan as shall be adopted by the Board of
Directors of the Company, and (d) such options to purchase Common Stock of the
Company as may be granted pursuant to the terms of the Stock Option Plan.
Mr. Orlando's employment agreement was originally entered into in July of
1994, but was amended in January and again in May of 1996. As so amended, Mr.
Orlando's employment agreement runs through January 31, 1999. Pursuant to his
employment, he will act as Vice President -- Chief Financial Officer of the
Company, and will be entitled to receive, among other things, (a) during the
first year thereof, a base salary of $81,900 (subject to a potential increase to
$117,000 upon the earlier to occur of (i) one quarter of Company profitability
or (ii) significant improvement in the working capital condition of the Company,
as approved by the Compensation Committee if certain Company performance
standards are met), (b) beginning in February of 1997, a base salary in an
amount equal to the amount of the then current base salary plus the greater of
(i) 7% of the base salary in effect for the previous 12 month period and (ii)
the percentage increase in the Consumer Price Index for the prior 12-month
period as reported by the Department of Labor, (c) an annual bonus in an amount
to be determined by the Board of Directors of the Company under such incentive
compensation plan as shall be adopted by the Board of Directors of the Company,
and (d) such options to purchase Common Stock of the Company as may be granted
pursuant to the terms of the Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Company does not maintain a Compensation Committee, as such. All
decisions relating to the compensation of its executive officers are made by the
Company's Board of Directors, which includes as Directors Richard D. Shannon,
the Company's Chairman of the Board, Gary C. Nelson, its President and Chief
Executive Officer, Kevin R. Baker and Lyle P. Edwards, all of whom, except
Mssrs. Baker and Edwards, are Company employees. Mr. Shannon, along with Kevin
R. Baker, serves as a Director and executive officer of Baycor Capital, a
private merchant bank based in Calgary, Canada, which is the parent corporation
of Baycor Ventures, the largest individual shareholder of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership on Form 3 and
changes of ownership on Form 4 or Form 5 with the Securities and Exchange
Commission (the "SEC"). They are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for them, the Company believes that during 1995, and to date during
1996, all of its officers, directors, and ten percent stockholders complied with
all Section 16(a) filing requirements applicable to them, except that Mr. Steven
J. Orlando, the Company's Chief Financial Officer, filed one report with respect
to one transaction during 1995 four months late.
CERTAIN TRANSACTIONS
Baycor Ventures, Inc. ("Baycor"), the Company's largest single shareholder,
has entered into a series of transactions with the Company since it was
incorporated in March of 1992.
Any future transactions between the Company and its officers, directors,
principal stockholders or other affiliates will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties on an
arms-length basis and will be approved by a majority of the Company's
disinterested directors. Any loans to officers, directors, principal
stockholders or affiliates of any of them will be made
16
<PAGE>
for bona fide business purposes, will be on terms no less favorable than could
be obtained from unaffiliated third parties, and will be approved by a majority
of the Company's disinterested directors.
In September 1995, the Company advanced to Baycor a loan in the amount of
$185,000. The loan has a two year term at a rate of prime plus 2% in interest
and is all due and payable at the end of two years.
In May 1995, the Company advanced to Bradley Landin, while he was Vice
President Operations and Director, a loan in the amount of $59,000. The loan has
a term of five years at a rate of principal plus 1% in interest with monthly
principal and interest payments of $1,200.
In July 1996, Baycor, Gary Nelson, President and Chief Executive Officer,
and Steven J. Orlando, Chief Financial Officer, agreed to loan the Company
$175,000 from time to time as needed until April 1997, when the line of credit
will be due and payable. The lenders will receive a general lien on Java
Centrale assets and will be at an interest rate of principal plus 2% per annum.
ESCROW AGREEMENT
Pursuant to an Amended and Restated Security Escrow Agreement (the "Escrow
Agreement"), by an between each of Baycor, Gary C. Nelson, Thomas A. Craig,
Bradley B. Landin, Richard D. Shannon, Richard M.H. Thompson & Associates, Inc.
and the Manry Company (such entities and persons being hereinafter collectively
referred to as the "Security Holders"), the Company, the Representative and
American Stock Transfer & Trust Company, as escrow agent (the "Escrow Agent"),
Baycor Ventures, the majority shareholder of the Company's Common Stock, Gary C.
Nelson, director and officer of the Company, Bradley B. Landin, former director
and officer of the Company and Thomas A. Craig, an officer of the Company,
placed an aggregate of 855,300 of their currently outstanding Common Shares in
escrow (the "Escrowed Shares") in connection with the Company's public offering
of its Common Stock in May of 1994.
The Escrow Agreement provides that the Escrowed Shares shall be released to
the Security Holders and no longer governed by the terms and provisions of the
Escrow Agreement as follows:
(a) If the Company has achieved, during the three fiscal years of the
Company ending March 31, 1995, March 31, 1996 and March 31, 1997,
respectively, an average annual net earnings per common share on a fully
diluted basis, calculated in accordance with GAAP, of at least $.40 per
common share, then all (100%) of the Escrowed Shares will be released to the
Security Holders and no longer be subject to the Escrow Agreement;
(b) If the Company achieves, during the four fiscal years of the Company
ending March 31, 1995, March 31, 1996, March 31, 1997 and March 1998,
respectively, an average annual net earnings per common share on a fully
diluted basis, calculated in accordance with GAAP, of at least $.40 per
common share, all (100%) of the Escrowed Shares will be released to the
Security Holders and no longer subject to the Escrow Agreement; and
(c) Any Escrowed Shares which have not been previously released to the
Security Holders in accordance with the provisions of the Escrow Agreement
will then be released, and no longer subject to the Escrow Agreement.
If any Security Holder exercises warrants or options to acquire additional
Common Stock of the Company (the "Additional Shares"), one-third (33 1/3%) of
such Additional Shares must immediately be delivered to the Escrow Agent, and
will be held and released pursuant to the Escrow Agreement as if they were
original Escrowed Shares.
17
<PAGE>
SHAREHOLDER PROPOSALS AND NOMINATIONS
Section 15 of Article III of the Company's Bylaws sets forth the following
procedures for shareholder nominations to the Board of Directors:
Nominations for election of members of the Board may be made by the Board or
by any holder of any outstanding class of capital stock of the Corporation
entitled to vote for the election of Directors. Notice of intention to make
any nominations (other than for persons named in the Notice of any meeting
called for the election of Directors) are required to be made in writing and
to be delivered or mailed to the President of the corporation by the later
of: (i) the close of business 21 days prior to any meeting of shareholders
called for the election of Directors or (ii) 10 days after the date of
mailing of notice of the meeting to shareholders. Such notification must
contain the following information, to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the Corporation owned by each proposed nominee; (d) the
name and residence address of the notifying shareholder; (e) the number of
shares of capital stock of the Corporation owned by the notifying
shareholder; and (f) whether the proposed nominee has ever been convicted of
or pleaded nolo contendere to any criminal offense involving dishonesty or
breach of trust, filed a petition in bankruptcy, or been adjudged bankrupt.
The notification shall be signed by the nominating shareholder and by each
nominee, and shall be accompanied by a written consent to be named as a
nominee for election as a Director from each proposed nominee, confirming
the accuracy of all of the above-described information contained in the
notice. Nominations not made in accordance with these procedures shall be
disregarded by the chairperson of the meeting, and upon his instructions,
the inspectors of election shall disregard all votes cast for each such
nominee. The foregoing requirements do not apply to the nomination of a
person to replace a proposed nominee who has become unable to serve as a
Director between the last day for giving notice in accordance with this
paragraph and the date of election of Directors if the procedure called for
in this paragraph was followed with respect to the nomination of the nominee
who has become unable to serve.
OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting other than those set forth above. However, if other matters come before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented by the proxy in accordance with the
judgment of the person or persons authorized to vote the proxy, and
discretionary authority to do so is included in the proxy.
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the Company's 1997 Annual Meeting of
Shareholders is June 19, 1997.
Steven J. Orlando
CORPORATE SECRETARY
Dated: September 21, 1996
The Annual Report to Shareholders for the fiscal year ended March 31, 1996
is being mailed concurrently with this Proxy Statement to all shareholders of
record as of September 6, 1996.
Item 2 of the Company's Form 10-Q, for the fiscal quarter ended June 30,
1996 is incorporated herein by reference.
Items 6, 7, 8 and 9 of the Company's Form 10-K for the fiscal year ended
March 31, 1996 are incorporated herein by this reference.
18
<PAGE>
A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENCED MARCH 31, 1996 AND
FORM 10Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1996 WILL BE PROVIDED TO
SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, JAVA
CENTRALE, INC., 1610 ARDEN WAY, SUITE 145, SACRAMENTO, CA 95819.
19
<PAGE>
APPENDIX A
1. Following is the text of the CURRENT Article III of the Company's
Articles of Incorporation, which would be amended if Proposal No. 2 is approved
by the shareholders.
III
The Corporation is authorized to issue two classes of shares, which
shall be known as Common Stock and Preferred Stock. The Corporation is
authorized to issue twenty-five million (25,000,000) shares of Common Stock
and twenty-five million (25,000,000) shares of Preferred Stock. On amendment
of this Article, each outstanding share of Preferred Stock, Series A, shall
be reclassified and changed into .01245 shares of Common Stock. The Series
designation of the Preferred Stock, Series B, shall be removed so that such
stock is referred to as "Preferred Stock," and each share of Common Stock
(including without limitation the above reclassified Preferred Stock, Series
A) shall be split up and converted into two and one-half (2 1/2) shares of
Common Stock.
2. Following is the text of the PROPOSED Article III of the Company's
Articles of Incorporation, as it would be amended if Proposal No. 2 is approved
by the shareholders.
III
(a) The corporation is authorized to issue two classes of stock, which
shall be designated respectively "Common Stock" and "Preferred Stock."
(b) The number of shares of Common Stock which the corporation is
authorized to issue is 25,000,000.
(c) The number of shares of Preferred Stock which the corporation is
authorized to issue is 25,000,000. The Preferred Stock may be issued in one
or more series. The Board of Directors is authorized to fix the number of
any such series of Preferred Stock and to determine the designation of any
such series. The Board of Directors is further authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the Board
of Directors originally fixing the number of shares constituting any series,
to increase or decrease (but not below the number of shares of such series
then outstanding) the number of shares of any such series subsequent to the
issuance of shares of that series.
3. Following is the text of the CURRENT Article IV of the Company's
Articles of Incorporation, which would be deleted in its entirety if Proposal
No. 2 is approved by the shareholders.
IV
The relative rights, preferences, privileges and restrictions granted or
imposed on the respective classes of shares or on their holders are as
follows:
1. DIVIDENDS
(a) The holders of Preferred Stock shall be entitled to receive
dividends and any other distribution (as defined below) when and as declared
by the Board of Directors of the Corporation out of the assets of the
Corporation that are legally available therefor, at the rate of $0.01 per
share per annum and no more, prior to the payment of any distributions to
holders of Common Stock. Dividends shall accrue from the date of issuance of
the shares of Preferred Stock and shall be deemed to accrue from day-to-day
whether or not earned or declared. Dividends on the Preferred Stock shall be
payable semi-annually on September 30 and March 31 of each year commencing
September 30,
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1993. Such dividends shall be cumulative so that if for any dividend period
dividends on the outstanding Preferred Stock at the rate herein specified
are not paid or declared and set apart therefor, the deficiency shall be
fully paid and declared and set apart for payment, without interest, before
any distribution, by dividend or otherwise, shall be paid on, declared, or
set apart from the Common Stock.
(b) For the purposes of this Section 1 herein, unless the context
requires otherwise, "distribution" shall mean the transfer of cash or
property without consideration, whether by way of dividend or otherwise,
payable other than in Common Stock, or the purchase or redemption of shares
of the Corporation for cash or property.
(c) No dividends shall be declared or declared and paid on or set aside
for the Common Stock or any shares ranking junior to the Preferred Stock in
any fiscal year unless and until the cumulative dividend on all Preferred
Stock outstanding in respect of such fiscal year, in addition to all accrued
but unpaid dividends on Preferred Stock, shall have been declared and paid
or set aside for payment.
2. LIQUIDATION PREFERENCES. In the event of any liquidation,
dissolution or winding-up of the Corporation, either voluntarily or
involuntarily, the holders of Preferred Stock shall receive an amount equal
to twenty cents ($.20) per share and all accrued and unpaid dividends, and
no more, before any amount shall be aid to the holders of Common Stock. In
the event that the assets of the Corporation are insufficient to permit full
payment to the holders of the Preferred Stock as herein provided, then such
assets shall be distributed among the outstanding shares of Preferred Stock.
Subject to such preferential rights, the holders of the Common Stock shall
receive, ratably, all remaining assets of the Corporation. A merger of the
Corporation with or into any other corporation or a sale of all or
substantially all of the assets of the Corporation, shall not be deemed a
liquidation, dissolution or winding-up of the Corporation within the meaning
of this paragraph.
3. VOTING RIGHTS
(a) Except as otherwise provided by law, the holders of Common Stock
shall have one vote for each share of Common Stock on all matters submitted
to a vote of the holders of shares of Common Stock. Except as otherwise
provided in these Amended and Restated Articles of Incorporation or by law,
the holders of Common Stock shall have exclusive voting rights and powers
including the exclusive right to receive notice of shareholder meetings. The
holders of shares of Preferred Stock shall have no voting rights except in
the event of a default as defined below. In the event of a default, the
holders of Preferred Stock shall as a class be entitled, an aggregate number
of votes equal to one hundred percent (100%) of the votes to which issued
shares of Common Stock as a class are entitled as of the date of the
default, and shall be entitled to receive notice of and to attend all
shareholder meetings.
(b) For the purposes of this Section 3, "default" shall mean failure by
the Corporation to pay dividends if the Corporation is legally entitled to
make such payment.
(c) While the Corporation is in default as defined herein, no dividend
or distribution shall be declared, paid on, or set apart for the Common
Stock.
(d) Such Preferred Stock voting rights shall continue until all
dividends accrued on the Preferred Stock shall have been paid or set apart
for payment, at which time the entire voting power shall revert to the
shareholders of Common Stock and continue in them until a subsequent default
occurs.
4. REDEMPTION
(a) REDEMPTION BY THE CORPORATION. On or before March 31, 1995, if
there is: (i) a change of control (as defined below) of the Corporation; or
(ii) a public offering (as defined below) of shares of Common Stock, the
Corporation may from time to time redeem all or any of the outstanding
shares of Preferred Stock, pro rata, by paying in cash 115% of contributed
capital per share plus all accrued and
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unpaid dividends on each redeemed share to and including the date of
redemption, the sum of which shall be the redemption price. After March 31,
1995, the Corporation may from time to time redeem all or any of the
outstanding Preferred Stock by paying in cash 110% of contributed capital
per share, plus all accrued and unpaid dividends on each redeemed share to
and including the date of redemption, the sum of which shall be the
redemption price. At least 60 days before the date of redemption, written
redemption notice shall be given to each holder of Preferred Stock by first
class mail, postage prepaid, at the shareholder's address as shown on the
Corporation's records, stating: (i) whether all or fewer than all of the
outstanding shares of the Preferred Stock are to be redeemed; (ii) the date
fixed for redemption; (iii) the redemption price; (iv) the place for payment
of the redemption price; and (v) the then-current conversion rate (as
determined in Section 5(a)) and the date of termination of the right to
convert. If fewer than all of the outstanding Preferred Stock shares are to
be redeemed, the redemption shall be on a pro rata basis, as designated by
the Board of Directors. No shares may be redeemed, however, unless all
accrued dividends of all periods to and including the current period on all
outstanding shares of Preferred Stock shall have been paid, except that
dividends for the current period shall not be paid for the shares being
redeemed. On or before the date fixed for redemption, each holder of shares
to be redeemed (unless conversion rights as provided in Article IV, Section
5(a) have previously been exercised as to those shares) shall surrender the
certificates representing these shares to the Corporation at the place
designated for payment in the redemption notice and shall then be entitled
to receive payment of the redemption price. If fewer than all the shares
represented by any of the surrendered certificates are redeemed, new
certificates representing the unredeemed shares shall be issued. If the
redemption notice is given in the manner provided in this Article IV,
Section 4(a), and if on the redemption date the redemption price is
available for payment, whether or not the certificates covering these shares
are surrendered, all rights with respect to the redeemable shares shall
terminate except the right of the holders to receive the redemption price
without interest on the surrender of the certificates.
(b) For the purposes of Section 4(a):
(i) "Change of Control" means the sale or other event or series of
events which results in the majority, determined at the time of the sale,
event or completion of the series of events, of the shares of Common
Stock outstanding being held by one or more persons any of whom are not
holders of shares of Common Stock or their affiliates at the date hereof;
and
(ii) "Public Offering" means an offer by the Corporation to sell
shares of Common Stock of the Corporation to the public pursuant to a
prospectus, registration statement or other similar disclosure document
in accordance with applicable securities laws and regulations.
(c) REDEMPTION BY SHAREHOLDER. At any time after March 31, 1995, any
holder of any of the outstanding shares of Preferred Stock may from time to
time require the Corporation to redeem all or any of his or her said shares
for cash at 110% of contributed capital per share plus all accrued and
unpaid dividends on each redeemed share to and including the date of
redemption, the sum of which is called the redemption price. A holder
wishing to so require the Corporation to redeem such shares shall give the
Corporation written notice by first-class mail, postage prepaid, stating:
(i) the holder's desire to redeem his or her shares of Preferred Stock; (ii)
the number of shares of Preferred Stock to be redeemed; and, (iii) the name
and address for payment of the redemption price. The Corporation shall
redeem the shares within sixty (60) days of receipt of the notice to the
extent it is legally entitled to do so.
Each holder of shares to be redeemed shall surrender the certificates
representing the shares to be redeemed to the Corporation and shall then be
entitled to receive payment of the redemption price. If fewer than all the
shares represented by any of the surrendered certificates are redeemed, new
certificates representing the unredeemed shares shall be issued. If the
redemption notice is given in the manner provided in this Article IV,
Section 4(c), and if on the redemption date the redemption
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<PAGE>
price is available for payment, whether or not the certificates covering
these shares are surrendered, all rights with respect to the redeemable
shares shall terminate except the right of the holders to receive the
redemption price without interest on the surrender of the certificates.
If the Corporation receives notice requiring the Corporation to redeem
shares of Preferred Stock in excess of the number of shares which the
Corporation is legally entitled to redeem, the redemption shall be on a pro
rata basis, as designated by the Board of Directors.
The Corporation shall give written notice to the holders of shares of
Preferred Stock:
(a) of the number of shares to be redeemed, and
(b) the date fixed for redemption; if it receives notice requiring it to
redeem any of the Preferred Stock, within sixty (60) days of receipt of such
Notice.
Notwithstanding this requirement to give notice, the Corporation will not be
liable to shareholders for the Corporation's inadvertent failure to give
notice and failure to give notice for whatever reason will not affect the
validity of any redemption under this Article IV, Section 4(c).
5. CONVERSION RIGHTS OF PREFERRED STOCK
(a) The shares of Preferred Stock shall be convertible at the option of
the respective holders of the shares on or before the earlier of: (i) the
15th day before the date, if any, fixed for the redemption of Preferred
Stock in a notice of redemption as provided in Article IV, Section 4(a) of
these articles; and (ii) March 31, 1995. On amendment of this Article, all
holders of Preferred Stock who, within the time period specified above,
endorse the certificates representing shares being converted and deliver
them, together with a written notice of their intention to convert, to the
Corporation at its principal office, shall be entitled to receive 0.04
shares of Common Stock for each share of Preferred Stock being converted. If
the number of outstanding shares of Common Stock has been increased or
reduced (except with respect to the issue of shares of Common Stock issued
upon the exercise of options to acquire shares of Common Stock outstanding
on the date hereof) since the first issuance of the Preferred Stock because
of a split, share dividend, merger, consolidation, or other capital change
or reorganization affecting the number of outstanding shares, the rate of
conversion shall be proportionately adjusted, to preserve fairly and
equitably as far as reasonably possible the original conversion rights of
the Preferred Stock shares being converted. The Corporation shall forthwith
do all things necessary to give effect to this adjustment.
(b) Shares converted under this Article IV, Section 5 shall not be
reissued. The Corporation shall at all times reserve and keep available a
sufficient number of its authorized but unissued shares of Common Stock, and
shall further obtain and keep in force any permits required, to enable it to
issue and deliver all shares of Common Stock required to cover the
conversion rights granted under this Article IV, Section 5.
(c) No fractional shares shall be issued on conversion, but the
Corporation shall pay cash for any fractional shares of Common Stock to
which shareholders may be entitled, at the fair value of Common Stock shares
at the time of conversion. The fair value of these shares shall be
determined by the Board of Directors.
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P
R
O
X
Y
JAVA CENTRALE, INC.
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 17, 1996
The undersigned appoint(s) Richard D. Shannon and Steven J. Orlando, and
each of them, as proxies for the undersigned, with full power of substitution
and revocation, to represent and to vote, as designated below, all shares of
Common Stock of Java Centrale, Inc. (the "Company") that the undersigned
would be entitled to vote if personally present, at the Annual Meeting of
Shareholders of the Company to be held at the Hilton Hotel, 2200 Harvard
Street, Sacramento, California on October 17, 1996 at 8:00 A.M., local time,
upon the following items as set forth in the Notice of Annual Meeting and
Proxy Statement, and according to their discretion upon all other matters
that may be properly presented for action at the Annual Meeting, or at any
adjournment thereof. The undersigned may revoke this Proxy at any time prior
to its exercise.
IF ANY SHAREHOLDER GIVES PROPER NOTICE AT THE ANNUAL MEETING OF HIS INTENTION
TO CUMULATE HIS VOTES IN THE ELECTION OF DIRECTORS, THE PROXYHOLDERS WILL
HAVE THE FULL DISCRETION AND AUTHORITY TO VOTE CUMULATIVELY AND TO ALLOCATE
VOTES AMONG ANY OR ALL OF THE NOMINEES OF THE BOARD OF DIRECTORS IN SUCH
ORDER AS THEY MAY DETERMINE UNLESS THE SHAREHOLDER HAS OTHERWISE INDICATED BY
MARKING THE BOXES ON THE OTHER SIDE OF THIS CARD. SEE THE VOTING SECURITIES
SECTION OF THE PROXY STATEMENT FOR MORE INFORMATION.
The Board of Directors of the Company recommends a vote FOR each of the
Proposals listed on this card.
(Continued and to be signed on the reverse side)
SEE REVERSE
SIDE
<PAGE>
/X/ Please mark
your vote as in
this example
(continued from other side)
FOR ALL WITHHOLD FROM
NOMINEES ALL NOMINEES
1. / / / /
Proposal to elect the following nominees to serve as directors, each to
holdoffice until the 1997 Annual Meeting of Shareholders or until his
successor has been duly elected and qualified. (INSTRUCTION: To withhold
authority to vote for any individual nominee, strike a line through his name
in the list.
NOMINEES: RICHARD D. SHANNON, GARY C. NELSON, LYLE P. EDWARDS, AND KEVIN R.
BAKER
2. Proposal to approve the amendment of the Articles of Incorporation to
authorize the issuance of up to 25,000,000 shares of preferred stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve the appointment of Grant Thornton, LLP as independent
auditors to audit the Company's financial statements for the fiscal year
ended 1997.
FOR AGAINST ABSTAIN
/ / / / / /
I/we do do not expect to attend this meeting
------ -----
TO ASSURE A QUORUM, YOU ARE URGED TO DATE, COMPLETE, AND SIGN THIS PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL
POSTAGE IF MAILED IN THE UNITED STATES.
This Proxy, when property executed and returned to the Company, will be voted
in the manner directed in this card.In the event that no such decision is
given hereon and this Proxy is not subsequently revoked or suspended, the
proxyholders named below intend to vote FOR the election of each of the
nominees for director listed below and FOR each of the other proposals listed
above.
SIGNATURE(S): DATE:
----------------------------- ---------------------------
Note: Please sign exactly as your name(s) appear(s). When signing as
attorney, executor, administrator, trustee, officer, partner, or guardian,
please give full title. If more than one trustee, all should sign. WHETHER OR
NOT YOU INTEND TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN THIS
PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
